Must the the image path be in the ckfinder directory?

The short answer answer is "no". Path to "userfiles" directory may be located outside the "ckfinder" directory.
It looks to me like a permission issue. Assuming that you're using the default resource type configuration (resource types are pointing into subfolders: "files", "images", "flash"), try creating manually the "images" subfolder ("/images/page_image/userfiles/images/") and copy there a sample .jpg file.
If you can see this file in the "Images" resource type, then it means that you need to correct permissions for this directory to be able to upload files.
If you can't see this file, try setting BaseDir to the correct absolute server path ("C:/Inetpub/wwwroot/userfiles/" for example).